JEDDAH, 13 December 2004 — Having come off a broad-based run which commenced in January 2004, the Bahraini market moved within a tight band during November, oscillating between both marginal gains and losses throughout the month. Despite pockets of buying support emerging at various stages during the month, market gains in the final week were only able to push up the indices marginally, however ending the month with a marginal loss of 0.21 percent. However, the market still remains well in positive territory for the year, up 31.2 percent, according to a report prepared by the Kuwait-based Global Investment House.
Fresh gains in insurance (+2.7 percent), industrial (+2.2 percent) and services (+0.95 percent) stocks were largely offset by profit booking in the banking sector (-1.1 percent), hotel and tourism (-0.8 percent), investment (-0.335 percent) and select heavyweight stocks, resulting in the market ending almost flat. On the BSE, there were 19 stocks out of the 46 market constituents which ended in positive territory. An additional 10 were lower while the remaining 17 stocks ended unchanged at the close of the month, the GIH report said.
Takaful International Co. spearheaded price leaders during the month, climbing 13.6 percent to regain some of the 20.5 percent in accumulated losses registered since September. For the year, the stock is still down 10.7 percent. The company saw renewed interest on its counter subsequent to announcing a 208.9 percent rise in net profits for nine months of 2004. Bahrain National Holding Co. and ARIG were other insurers in the price leaders’ list, with those stocks gaining 3.95 percent and 2.1 percent respectively.
The performance of ARIG’s stock has improved many times in the past few months, with the latest news of ARIG’s listing at the DFM on Dec. 9, and announcements that the company would float the first Islamic re-insurance company supporting further gains during the month.
Though investment stocks were a mixed bag in terms of their performance, one of the top gainers from amongst the market was Gulf Finance House. The stock hit a new high during the month, rising 9.1 percent to $1.80, supported by a 309.6 percent increase in nine months of 2004 net profits. Also, GFH announced that it had forged a strategic partnership with the Gulf Development Real Estate Company (GDREC), Kuwait, to jointly explore investment opportunities in the growing regional real estate market. Later in the month, GFH announced plans for a $3.8 billion project to create the Legends-Dubailand park, comprising an area of 24.7 million feet, which would include three theme parks, a leisure complex, a golf course, residential homes and offices. The company’s stock has been on a positive run since July, with its price appreciating 45.2 percent up to November end.
Bahrain Maritime and Mercantile International Co. was also among the price leaders in the services sector, appreciating 8.7 percent to a new all-time high, backed by last month’s announcement of robust profit growth for nine months of 2004. This is the 7th month running that BMMI has produced positive stock gains. Other market gainers during the month also included Delmon Poultry Co. (+3.8 percent), Esterad Investment Co. (+3.4 percent) and Trafco (+3.2 percent).
On the opposite side, United Gulf Bank bottomed out, shedding 9.9 percent during the month, despite having announced profit growth of 27.6 percent last month. During November, news that the bank signed an MOU with the Bank of Baghdad to take a 25 percent stake in the capital increase of the bank, raising BoB’s capital to nearly $36 million, did not help the stock break the downward slide the stock has been locked in since October.
The GIH report said that Arab Banking Corporation also ended lower, despite positive earnings and favorable news surrounding the company. During the month, ABC was granted a license by the Central Bank of Iraq to operate in the country, bringing the number of foreign banks to eight. Additionally, ABC announced that its $500 million 5-year facility was oversubscribed. ABC also announced nine-month profits of $531 million as compared to a mere $98 million recorded during the corresponding period of 2003, representing a whopping growth of 441.8 percent. Despite this figure including $455 million in realized profits from the disposal of ABC’s subsidiaries, Banco Atl?ntico and International Bank of Asia Limited, the company’s earning stream remains strong, with net profits from continuing operations, excluding the impact of the two disposals, amounting to $76 million during the 9M 2004 compared to $57 million during the corresponding period of 2003. Nevertheless, ABC could not regain its balance and fell 3.1 percent by month end.
Buying interest, which has been building since August, retreated during holiday-shortened November, as volumes of shares traded, value of shares traded and transactions all slipped lower. The volume of shares traded fell by 15.2 percent to 24 million shares, while the value of shares traded also retreated to BD10.3 million or 20.7 percent lower. Ahli United Bank headed the market in terms of both volume and value of shares traded, amounting to 35.6 percent and 25.2 percent of market trades respectively. But the heavy interest enjoyed on its counter did not materialize into price gains, as the stock slipped 1.2 percent, despite announcing a 20 percent increase in 9-month profits. Other heavily traded scrips, in terms of both volumes and values included Batelco, United Gulf Industries Corporation, Bank of Bahrain and Kuwait, the Bahraini Saudi Bank and National Bank of Bahrain, among others, the report added.
Investors seem to have been building positions since the start of the current year and may appear satisfied with gains achieved up to November. Therefore, looking forward to December, the GIH report said, that the BSE may continue in its range bound action, most likely ending on the upside though, supported by the specter of high oil prices, positive end of year earnings and robust economic data. Trading activity should also begin to pick up, as investors reshuffle positions to prepare for the end of year earnings, hence, dividend distributions. Profit-taking though, on a number of counters which have run up in the last few months may be inevitable to adjust prices to acceptable levels.
